Q3 Highlights:
- Revenue of $16.9 million
- GAAP Gross Profit of 51%
- GAAP Operating Expenses of $17.0 million
- Cash, Cash Equivalents and Short-Term Investments of $25.6 million
Ikanos Communications, Inc. (
"Ikanos achieved better than expected third quarter results, with gross profits exceeding our target, while revenue ended near the mid-range of our guidance," said Dennis Bencala, chief financial officer and vice president of finance at Ikanos. "We achieved revenue of $16.9 million, with a GAAP gross profit of 51%, well above our guidance of 47% to 49%. We also sequentially reduced operating expenses for the fourth consecutive quarter, with OPEX down to $17.0 million and below our guidance of $17.5 to $18.5 million. Additionally, quarter-end inventory was managed to $1.6 million, while meeting customer demand and contributing to a quarter-ending cash and short-term investments balance of $25.6 million."
"While we continued to grow our opportunity pipeline with a number of new design wins in Q3, we also took a significant step forward in securing Ikanos' position in the emerging FTTdp market," said Omid Tahernia, president and CEO at Ikanos. "This was accomplished through the introduction of our single-port CO processor, the Velocity™-Uni, which was formally launched at the Broadband World Forum (BBWF) conference in Amsterdam last week. Also at the conference, we were quite pleased to be selected as the recipient of InfoVision's "Best Broadband Enabler" award this year, with our Velocity™-3 taking the top spot in recognition of its technical excellence."
"While we continue to navigate through the current transition in our business, we remain positive on the outlook," continued Tahernia. "We see the additional design wins, the expansion of our TAM with new products such as inSIGHT and Velocity™-Uni, and the early customer demand for our next-generation G.fast platform, creating tremendous market momentum and future growth potential for our overall business."
Financial Highlights
Ikanos reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP) and additionally on a non-GAAP basis. Non-GAAP net income (loss), non-GAAP gross profits, non-GAAP operating expenses and non-GAAP earnings per share, where applicable, exclude the income statement effects of stock-based compensation, restructuring charges and amortization of intangible assets. Ikanos has provided these measures because its management believes these additional non-GAAP measures are useful to investors for performing financial analysis as these additional measures highlight Ikanos' recurring operating results. Ikanos' management uses these non-GAAP measures internally to evaluate Ikanos operating performance and to plan for its future. However, non-GAAP measures are not a substitute for GAAP reporting. For a reconciliation of GAAP versus non-GAAP financial information, please see the attached schedules.
Fiscal Third Quarter 2013 Results
Revenue for the third quarter of 2013 was $16.9 million, compared to revenue of $31.4 million for the third quarter of 2012 and revenue of $19.1 million for the second quarter of 2013. GAAP gross profit for the third quarter of 2013 was 51%, compared to a GAAP gross profit of 47% for the third quarter of 2012 and GAAP gross profit of 49% for the second quarter of 2013.
Non-GAAP gross profit for the third quarter of 2013 was 52%, compared to a non-GAAP gross profit of 48% for the third quarter of 2012 and non-GAAP gross profit of 49% for the second quarter of 2013.
GAAP operating expenses for the third quarter of 2013 were $17.0 million, compared to operating expenses of $21.1 million for the third quarter of 2012 and operating expenses of $17.5 million for the second quarter of 2013.
Non-GAAP operating expenses for the third quarter of 2013 were $16.0 million, compared to non-GAAP operating expenses of $20.2 million for the third quarter of 2012 and non-GAAP operating expenses of $16.5 million for the second quarter of 2013.
GAAP net loss for the third quarter of 2013 was $(8.7) million, or a loss of $(0.12) per share on 71.7 million weighted average shares outstanding. This compares with a net loss of $(6.4) million, or a loss of $(0.09) per share on 69.8 million weighted average shares outstanding for the third quarter of 2012 and a GAAP net loss of $(8.7) million, or a loss of $(0.12) per share on 71.2 million weighted average shares outstanding for the second quarter of 2013.
Non-GAAP net loss for the third quarter of 2013 was $(7.5) million, or a loss of $(0.11) per share on 71.7 million weighted average shares outstanding compared to a non-GAAP net loss of $(5.1) million, or a loss of $(0.07) per share on 69.8 million weighted average shares outstanding for the third quarter of 2012, and a non-GAAP loss of $(7.5) million, or a loss of $(0.11) per share on 71.2 million weighted average shares outstanding for the second quarter of 2013.
Cash, cash equivalents and short-term investments at the end of third quarter of 2013 were $25.6 million, compared to $27.3 million at the end of the second quarter of 2013.
Additionally, at the end of the third quarter of 2013 inventory was $1.6 million compared to $4.0 million at the end of the second quarter of 2013. Current liabilities at the end of the third quarter of 2013 were $25.8 million, compared to $21.1 million at the end of the second quarter of 2013.
Outlook
Revenue is expected to be between $17.0 million and $19.0 million for the fiscal fourth quarter of 2013.
GAAP gross profit for the fiscal fourth quarter of 2013 is expected to be between 49% and 51%. Non-GAAP gross profit is expected to be between 50% and 52% for the fourth quarter of 2013.
GAAP operating expenses for the fiscal fourth quarter of 2013 are expected to be in the range of $17.0 million to $18.0 million. On a non-GAAP basis operating expenses are expected to be in the range of $16.0 million to $17.0 million for the fourth quarter of 2013.
GAAP net loss for the fiscal fourth quarter of 2013 is expected to be in the range of approximately $(7.5) million to $(9.9) million, or a GAAP loss per share of $(0.10) to $(0.14). Non-GAAP net loss for the fiscal fourth quarter of 2013 is expected to be in the range of approximately $(6.5) million to $(8.6) million, or a non-GAAP loss per share of $(0.09) to $(0.12).
Third Quarter Conference Call
Management will review the third quarter financial results and its expectations for subsequent periods on a conference call on Tuesday, October 29, 2013 at 1:30 p.m. Pacific Time. To listen to the call, please visit
http://www.ikanos.com/investor/irevents/ and click on the link provided for the webcast or dial (888) 428-9490 or (719) 325-2432 and enter conference ID 8616859. The webcast will be archived and available for 90 days at
http://www.ikanos.com/investor/irevents/. A replay of the conference call will be accessible until January 27, 2014 by dialing (888) 203-1112 or (719) 457-0820 and entering conference ID 8616859.
About Ikanos Communications, Inc.
Ikanos Communications, Inc. (
© 2013 Ikanos Communications, Inc. All Rights Reserved. Ikanos Communications, Ikanos and the Ikanos logo, the Bandwidth without boundaries tagline, Fusiv, inSIGHT, Neos, Ikanos Velocity and Ikanos NodeScale are among the trademarks or registered trademarks of Ikanos Communications. All other trademarks mentioned herein are properties of their respective holders.
Safe Harbor Statement
Some of the statements included in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You should not place undue reliance on these statements. These forward-looking statements include statements that reflect the current views of our senior management with respect to our financial performance and future events with respect to our business and our industry in general. Statements that include the words "expect," "intend," "plan," "believe," "anticipate," "estimate," and similar statements of a future or forward-looking nature identify forward-looking statements.
Forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to, the following: our ability to reduce or maintain operating expenses at current levels; our ability to successfully complete the public offering as described in our Registration Statement on Form S-1 filed on August 23, 2013; our ability to translate customer demand into revenue; our ability to deliver full production releases of our newer products and the acceptance of those products by our customers and telecommunications service providers; that not all design wins nor successful lab or field trials will result in revenue for us; macroeconomic conditions which may cause our customers to defer purchasing plans or cancel any purchasing plans altogether despite successful design wins; that production ramps by our customers will continue at the same rate or at all; the continued demand by telecommunications service providers for our specific xDSL semiconductor products; our ability to maintain an adequate cash and short-term investment balance; our ability to comply with the financial covenants in our credit agreement; the failure of telecommunications service providers to implement deployment plans on schedule, or at all, despite positive engagements or successful lab or field trials; our continued ability to obtain and deliver production volumes of new and current products and technologies; our ability to generate demand and close transactions for the sale of our products; our ability to develop commercially successful products as a result of our current research and development programs; our reliance on third parties to manufacture the products we sell; competition in the markets in which we operate; risks associated with doing business abroad, including foreign currency risks; the fact that the products we sell may not satisfy shifting customer demand or compete successfully with our competitors' products; that our offering of standalone software, selling directly to telecommunications service providers, will generate any revenue for us or result in significant or any operational costs savings for the telecommunications service providers; and unexpected future costs, expenses, and financing requirements. For a more detailed discussion of how these and other risks and uncertainties could cause our actual results to differ materially from those indicated in our forward-looking statements, see our reports filed with SEC (available at www.sec.gov), including our Annual Report on Form 10-K for the fiscal year ended December 30, 2012, our Quarterly Report on Form 10-Q for the second quarter ended June 30, 2013, and our Registration Statement on Form S-1 filed on August 23, 2013. Ikanos undertakes no obligation to update or revise these forward-looking statements to reflect events or circumstances subsequent to date of this press release.
IKANOS COMMUNICATIONS, INC.
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended Nine Months Ended
-------------------------- --------------------------
September September September September
29, 2013 30, 2012 29, 2013 30, 2012
------------ ------------ ------------ ------------
Revenue $ 16,900 $ 31,375 $ 62,167 $ 94,190
Cost of revenue 8,263 16,620 30,272 48,274
------------ ------------ ------------ ------------
Gross profit 8,637 14,755 31,895 45,916
------------ ------------ ------------ ------------
Operating expenses:
Research and
development 12,455 16,581 38,572 43,423
Selling, general
and
administrative 4,589 4,507 14,227 13,835
Restructuring - - - 1,062
------------ ------------ ------------ ------------
Total operating
expenses 17,044 21,088 52,799 58,320
------------ ------------ ------------ ------------
Loss from operations (8,407) (6,333) (20,904) (12,404)
Interest income and
other, net (147) 61 (507) (251)
------------ ------------ ------------ ------------
Loss before income
taxes (8,554) (6,272) (21,411) (12,655)
Provision for income
taxes 111 85 343 406
------------ ------------ ------------ ------------
Net loss $ (8,665) $ (6,357) $ (21,754) $ (13,061)
============ ============ ============ ============
Net loss per share
Basic and diluted $ (0.12) $ (0.09) $ (0.31) $ (0.19)
============ ============ ============ ============
Weighted average
number of shares
Basic and diluted 71,662 69,788 71,086 69,555
============ ============ ============ ============
IKANOS COMMUNICATIONS, INC.
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended
-------------------------------------------
September 29, June 30, September 30,
2013 2013 2012
------------- ------------- -------------
Revenue $ 16,900 $ 19,115 $ 31,375
Cost of revenue 8,263 9,813 16,620
------------- ------------- -------------
Gross profit 8,637 9,302 14,755
------------- ------------- -------------
Operating expenses:
Research and development 12,455 12,599 16,581
Selling, general and
administrative 4,589 4,866 4,507
Restructuring - - -
------------- ------------- -------------
Total operating expenses 17,044 17,465 21,088
------------- ------------- -------------
Loss from operations (8,407) (8,163) (6,333)
Interest income and other,
net (147) (442) 61
------------- ------------- -------------
Loss before income taxes (8,554) (8,605) (6,272)
Provision for income taxes 111 68 85
------------- ------------- -------------
Net loss $ (8,665) $ (8,673) $ (6,357)
============= ============= =============
Basic and diluted net loss per
share $ (0.12) $ (0.12) $ (0.09)
============= ============= =============
Weighted average outstanding
shares:
Basic and diluted 71,662 71,182 69,788
============= ============= =============
IKANOS COMMUNICATIONS, INC.
Unaudited Reconciliation of GAAP to Non-GAAP Condensed Consolidated
Statements of Operations
(In thousands, except per share data)
Three Months Ended September 29, 2013
-----------------------------------------
Non-GAAP
As Reported Adjustments Non-GAAP
----------- ----------- -----------
Revenue $ 16,900 $ - $ 16,900
Cost of revenue 8,263 (2) (a) 8,141
(120) (b)
----------- ----------- -----------
Gross profit 8,637 (122) 8,759
----------- ----------- -----------
Operating expenses:
Research and development 12,455 (673) (a) 11,782
Selling, general and
administrative 4,589 (250) (a) 4,255
(84) (b)
Restructuring - - -
----------- ----------- -----------
Total operating expenses 17,044 (1,007) 16,037
----------- ----------- -----------
Loss from operations (8,407) 1,129 (7,278)
Interest income and other, net (147) - (147)
----------- ----------- -----------
Loss before income taxes (8,554) 1,129 (7,425)
Provision for income taxes 111 - 111
----------- ----------- -----------
Net loss $ (8,665) $ 1,129 $ (7,536)
=========== =========== ===========
Net loss per share:
Basic and diluted $ (0.12) $ (0.11)
=========== ===========
Weighted average outstanding
shares:
Basic and diluted 71,662 71,662
=========== ===========
Three Months Ended September 30, 2012
-----------------------------------------
Non-GAAP
As Reported Adjustments Non-GAAP
----------- ----------- -----------
Revenue $ 31,375 $ - $ 31,375
Cost of revenue 16,620 4 (a) 16,171
(453) (b)
----------- ----------- -----------
Gross profit 14,755 (449) 15,204
----------- ----------- -----------
Operating expenses:
Research and development 16,581 (514) (a) 16,067
Selling, general and
administrative 4,507 (209) (a) 4,173
(125) (b)
Restructuring - - -
----------- ----------- -----------
Total operating expenses 21,088 (848) 20,240
----------- ----------- -----------
Loss from operations (6,333) 1,297 (5,036)
Interest income and other, net 61 - 61
----------- ----------- -----------
Loss before income taxes (6,272) 1,297 (4,975)
Provision for income taxes 85 - 85
----------- ----------- -----------
Net loss $ (6,357) $ 1,297 $ (5,060)
=========== =========== ===========
Net loss per share:
Basic and diluted $ (0.09) $ (0.07)
=========== ===========
Weighted average outstanding
shares:
Basic and diluted 69,788 69,788
=========== ===========
Notes: Three Months Ended
---------------------------
September 29, September 30,
2013 2012
------------- -------------
(a) Stock-based compensation $ 925 $ 719
(b) Amortization of acquired intangible assets 204 578
------------- -------------
Total non-GAAP adjustments $ 1,129 $ 1,297
============= =============
IKANOS COMMUNICATIONS, INC.
Unaudited Reconciliation of GAAP to Non-GAAP Condensed Consolidated
Statements of Operations
(In thousands, except per share data)
Three Months Ended June 30, 2013
-----------------------------------------------
Non-GAAP
As Reported Adjustments Non-GAAP
------------- ------------- -------------
Revenue $ 19,115 $ - $ 19,115
Cost of revenue 9,813 (2) (a) 9,692
(119) (b)
------------- ------------- -------------
Gross profit 9,302 (121) 9,423
------------- ------------- -------------
Operating expenses:
Research and development 12,599 (551) (a) 12,048
Selling, general and
administrative 4,866 (337) (a) 4,404
(125) (b)
Restructuring - - -
------------- ------------- -------------
Total operating
expenses 17,465 (1,013) 16,452
------------- ------------- -------------
Loss from operations (8,163) 1,134 (7,029)
Interest income and
other, net (442) - (442)
------------- ------------- -------------
Loss before income taxes (8,605) 1,134 (7,471)
Provision for income taxes 68 - 68
------------- ------------- -------------
Net loss $ (8,673) $ 1,134 $ (7,539)
============= ============= =============
Net loss per share:
Basic and diluted $ (0.12) $ (0.11)
============= =============
Weighted average
outstanding shares:
Basic and diluted 71,182 71,182
============= =============
Notes:
Three Months
Ended
June 30, 2013
-------------
(a) Stock-based
compensation $ 890
(b) Amortization of
acquired intangible
assets 244
-------------
Total non-GAAP
adjustments $ 1,134
=============
IKANOS COMMUNICATIONS, INC.
Unaudited Reconciliation of GAAP to Non-GAAP Condensed Consolidated
Statements of Operations
(In thousands, except per share data)
Nine Months Ended September 29,
2013
------------------------------------------
Non-GAAP
As Reported Adjustments Non-GAAP
----------- ------------ -----------
Revenue $ 62,167 $ - $ 62,167
Cost of revenue 30,272 (5) (a) 29,908
(359) (b)
----------- ------------ -----------
Gross profit 31,895 (364) 32,259
----------- ------------ -----------
Operating expenses:
Research and development 38,572 (1,795) (a) 36,777
Selling, general and
administrative 14,227 (850) (a) 13,044
(333) (b)
Restructuring - - -
----------- ------------ -----------
Total operating expenses 52,799 (2,978) 49,821
----------- ------------ -----------
Loss from operations (20,904) 3,342 (17,562)
Interest income and other, net (507) - (507)
----------- ------------ -----------
Loss before income taxes (21,411) 3,342 (18,069)
Provision for income taxes 343 - 343
----------- ------------ -----------
Net loss $ (21,754) $ 3,342 $ (18,412)
=========== ============ ===========
Net loss per share:
Basic and diluted $ (0.31) $ (0.26)
=========== ===========
Weighted average outstanding
shares:
Basic and dilluted 71,086 71,086
=========== ===========
IKANOS COMMUNICATIONS, INC.
Unaudited Reconciliation of GAAP to Non-GAAP Condensed Consolidated
Statements of Operations
(In thousands, except per share data)
Nine Months Ended September 30,
2012
------------------------------------------
Non-GAAP
As Reported Adjustments Non-GAAP
----------- ------------ -----------
Revenue $ 94,190 $ - $ 94,190
Cost of revenue 48,274 2 (a) 46,823
(1,453) (b)
----------- ------------ -----------
Gross profit 45,916 (1,451) 47,367
----------- ------------ -----------
Operating expenses:
Research and development 43,423 (1,450) (a) 41,973
Selling, general and
administrative 13,835 (569) (a) 12,891
(375) (b)
Restructuring 1,062 (1,062) (c) -
----------- ------------ -----------
Total operating expenses 58,320 (3,456) 54,864
----------- ------------ -----------
Loss from operations (12,404) 4,907 (7,497)
Interest income and other, net (251) - (251)
----------- ------------ -----------
Loss before income taxes (12,655) 4,907 (7,748)
Provision for income taxes 406 - 406
----------- ------------ -----------
Net loss $ (13,061) $ 4,907 $ (8,154)
=========== ============ ===========
Net loss per share:
Basic and diluted $ (0.19) $ (0.12)
=========== ===========
Weighted average outstanding
shares:
Basic and dilluted 69,555 69,555
=========== ===========
Notes: Nine Months Ended
---------------------------
September 29, September 30,
2013 2012
------------- -------------
(a) Stock-based compensation $ 2,650 $ 2,017
(b) Amortization of acquired intangible assets 692 1,828
(c) Restructuring - 1,062
------------- -------------
Total non-GAAP adjustments $ 3,342 $ 4,907
============= =============
IKANOS COMMUNICATIONS, INC.
Unaudited Condensed Consolidated Balance Sheets
(In thousands)
September 29, June 30, December 30,
2013 2013 2012
------------- ------------- -------------
Assets
Current assets:
Cash, cash equivalents and
short-term investments $ 25,645 $ 27,321 $ 31,176
Accounts receivable 13,843 12,091 15,748
Inventory 1,571 4,037 8,122
Prepaid expenses and other
current assets 3,640 4,035 5,892
------------- ------------- -------------
Total current assets 44,699 47,484 60,938
Property and equipment, net 8,775 8,925 8,769
Intangible assets, net 837 1,040 1,529
Other assets 2,250 2,482 2,612
------------- ------------- -------------
$ 56,561 $ 59,931 $ 73,848
============= ============= =============
Liabilities and Stockholders'
Equity
Current liabilities:
Revolving line $ 10,800 $ 7,500 $ 5,000
Accounts payable 6,206 5,081 5,679
Accrued liabilities 8,771 8,532 13,688
------------- ------------- -------------
Total current liabilities 25,777 21,113 24,367
Other liabilities 2,105 2,459 2,854
------------- ------------- -------------
Total liabilities 27,882 23,572 27,221
Stockholders' equity 28,679 36,359 46,627
------------- ------------- -------------
$ 56,561 $ 59,931 $ 73,848
============= ============= =============
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